NCP US Terminals LP v. Odfjell Terminals US Holdings, LLC

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE NCP US TERMINALS LP, ) ) Plaintiff, ) ) v. ) C.A. No. 2024-1338-KSJM ) ODFJELL TERMINALS US ) HOLDINGS, LLC, ODFJELL ) TERMINALS B.V., ODFJELL ) TERMINALS US HOLDINGS AS, ) and ODFJELL TERMINALS ) AMERICAS LLC, ) ) Defendants. ) POST-TRIAL MEMORANDUM OPINION Date Submitted: April 20, 2026 Date Decided: August 6, 2026 Raymond J. DiCamillo, Brock E. Czeschin, Nicole M. Henry, Kaitlyn R. Zavatsky, RICHARDS, LAYTON & FINGER, P.A., Wilmington, Delaware; Richard K. Welsh, David Pernas, ALPHA TRIAL GROUP, LLP, Los Angeles, California; Counsel for Plaintiff NCP US Terminals LP. Martin S. Lessner, Andrew J. Czerkawski, Liam C. Reeves, YOUNG CONAWAY STARGATT & TAYLOR, LLP, Wilmington, Delaware; Michael C. Keats, Rebecca L. Martin, Anne S. Aufhauser, Harrison D. Polans, Michael Yoon, FRIED, FRANK, HARRIS, SHRIVER & JACOBSON LLP, New York, New York; Counsel for Defendants Odfjell Terminals US Holdings, LLC, Odfjell Terminals B.V., Odfjell Terminals US Holdings AS, and Odfjell Terminals Americas LLC. McCORMICK, C.  The parties are members of Odfjell Terminals US Holdings LLC (“OTUS” or the “Company”), a Norwegian shipping company. The private equity plaintiff owns 49% of the Company. The defendants own 51% of the Company and operate it. The plaintiff would like to maximize the value of its investment through distributions or a sale of its interests, and the defendants would like to buy out the plaintiff. But the parties are far apart on price, and they have used their respective contractual and governance rights under the Company’s LLC agreement as bargaining chips in the larger buyout discussion. The plaintiff refused to amend or extend the existing debt facility that was set to expire months after the parties’ dispute escalated. And the defendants refused to approve distributions. The plaintiff filed this suit claiming that the defendants breached express and implied terms of the LLC agreement by refusing distributions thereby triggering plaintiff’s call rights under that agreement. Alternatively, the plaintiff requested judicial dissolution based on board deadlock. The defendants filed a separate suit, later consolidated with this action, seeking the appointment of a limited-purpose custodian to resolve the debt crisis. At the court’s urging, the parties consented to the appointment of a limited- purpose custodian to work through the debt crisis. The parties then went to trial on the plaintiff’s claims of breach of the LLC agreement and judicial dissolution. The plaintiff failed to prove its claim of breach of the LLC Agreement. At bottom, the plaintiff asks the court to enforce a contractual right for which they never bargained—the right to require the defendants to act in the plaintiff’s best interests when determining whether to approve distributions. The plaintiff’s claim for judicial dissolution similarly fails. The board’s deadlock over leveraged distributions, distributions to which the plaintiff is not entitled, does not qualify as the sort of existential issue warranting judicial dissolution. This post-trial decision enters judgment for the defendants. I. FACTUAL BACKGROUND Trial took four days. The record comprises 351 trial exhibits, live testimony from six fact witnesses, deposition testimony from 12 fact witnesses, and 70 stipulations of fact.1 These are the facts as the court finds them after trial. A. Northleaf Acquires A Stake In OTUS. Plaintiff NCP US Terminals LP is an investment vehicle owned by private equity funds managed by Northleaf Capital Partners Ltd. and its affiliates (“Northleaf”).2 Northleaf invests in infrastructure and generally holds its 1 This decision cites to: C.A. No. 2024-1338-KSJM docket entries (by docket “Dkt.” number); trial exhibits (by “JX-” number); the trial transcript, Dkts. 202–05 (“Trial Tr.”); supplemental submissions, Dkt. 253; and stipulated facts set forth in the Parties’ Stipulation and Pre-Trial Order, Dkt. 186 (“PTO”). The parties called the following fact witnesses: John Blanchard (Odfjell Terminals U.S., CEO), Terje Iversen (Odfjell SE, CFO), Adrian Lenning (Odfjell SE, Managing Director of Terminals), Kaushik Ramakrishnan (a/k/a Kash Ramki) (Northleaf Capital, Executive Operating Partner), Jamie Storrow (Northleaf Capital, Co-Head of Infrastructure), and Morris White (Odfjell Terminals U.S., CFO). The parties submitted the deposition transcripts of the witnesses called at trial and called the following witnesses by deposition only: Carmine Falcone (Odfjell Terminals U.S., Board Member), Harald Fotland (Odfjell SE, CEO), Rosalee Hermens (Odfjell Terminals U.S., Board Member), Stian Ommedal (Odfjell SE, Manager of Business Analytics), Arild Viste (Odfjell Terminals U.S., Board Member), and Jared Waldron (Northleaf Capital, Co-Head of Infrastructure). The transcripts of the witnesses’ respective depositions are cited using the witnesses’ last names and “Dep. Tr.” 2 JX-24 (“LLC Agreement”) at 6; Trial Tr. at 283:15–18 (Ramki). 2 investments for seven to eight years.3 To generate returns, the firm targets investments that both appreciate and generate cash through distributions.4 In 2019, Northleaf acquired a 49% membership interest in the Company for $115.5 million.5 OTUS owns and operates two liquid bulk storage terminals located in Houston, Texas and Charleston, South Carolina.6 Northleaf expected to hold its OTUS interest for about seven years.7 So Northleaf is near the end of its expected investment horizon in OTUS.8 Defendant Odfjell Terminals B.V. (“OTBV”) held the remaining 51% interest in OTUS.9 OTBV is a subsidiary of non-party Odfjell SE,10 a publicly traded Norwegian chemical shipping and terminal group.11 OTBV later transferred its interest to another Odfjell SE subsidiary, Odfjell Terminals US Holdings AS (“OTAS”).12 In turn, OTAS transferred the 51% OTUS interest to Odfjell Terminals Americas LLC (together with OTUS, OTBV, and OTAS, “Odfjell” or “Defendants”).13 3 Trial Tr. at 1015:15–1016:14 (Storrow). 4 Id. at 1016:4–19 (Storrow). 5 PTO ¶¶ 25–26. 6 Id. ¶ 24. 7 Trial Tr. at 465:23–466:8 (Ramki). 8 See id. 9 PTO ¶ 27. 10 Id. 11 Trial Tr. at 670:1–10 (Lenning). 12 PTO ¶ 28. 13 Id. 3  Odfjell is the operating partner of OTUS under a master services agreement.14 Odfjell supports and oversees operations related to safety, engineering, audits, IT support, and marketing.15 B. The Parties Enter An LLC Agreement. At the time of its investment, Northleaf entered into a Limited Liability Company Agreement (the “LLC Agreement”) with OTBV.16 Northleaf and Odfjell Terminals Americas are the Company’s sole “Members.”17 Under the LLC Agreement, six managers govern OTUS (the “Board”).18 During all relevant periods, the Board comprised Terje Iversen, Adrian Lenning, and Arild Viste for Odfjell and Kash Ramki, Carmine Falcone, and Rosalee Hermens for Northleaf.19 Each year, the Board approves a budget under Section 7.2 of the LLC Agreement.20 The Board also decides whether the Company has “Available Cash” to make distributions under Section 5.1(a) of the LLC Agreement.21 And Board decisions bind the Members under Section 6.1(c) of the LLC Agreement.22 14 LLC Agreement § 6.12. 15 Trial Tr. at 674:21–675:10 (Lenning). 16 PTO ¶ 1; LLC Agreement. 17 PTO ¶¶ 1, 27–28. 18 Id. ¶ 31; LLC Agreement § 6.3(a). 19 PTO ¶¶ 31–42. 20 Trial Tr. at 338:5–6 (Ramki); LLC Agreement § 7.2; see also id. § 6.7(g) (requiring unanimous consent). 21 LLC Agreement § 5.1(a). 22 Id. § 6.1(c). 4  C. OTUS Refinances And Improves Its Operations. Kash Ramki is an executive operating partner at Northleaf.23 He led Northleaf’s diligence of OTUS in 2019 and is Northleaf’s lead Board representative.24 Northleaf invested in the Company expecting quarterly distributions.25 But according to Ramki, “[s]oon after [Northleaf] acquired [its] interest, [it] learned that the business was . . . underinvested in for many years.”26 The Company had deferred significant maintenance and capital expenditures.27 John Blanchard, the CEO of OTUS since May 2019, acknowledged that the Company “was in pretty poor shape.”28 Given OTUS’s condition, the Board deferred distributions.29 And both Members agreed that earnings should be reinvested.30 To turn around the Company, the Board needed to secure a new credit facility to fund capital expenditures.31 To do so, the Board first had to approve a financing option, which is typically done through the annual budgeting process.32 Management could then go to the market to procure the executable terms.33 23 Trial Tr. at 461:7–10 (Ramki). 24 Id. at 283:19–22, 285:20–24 (Ramki). 25 Id. at 1007:9–12 (Iversen). 26 Id. at 287:14–16 (Ramki). 27 Id. at 287:20–23 (Ramki). 28 Id. at 8:16–18 (Blanchard); PTO ¶ 32. 29 Trial Tr. at 64:20–65:2 (Blanchard). 30 Id. at 291:2–7 (Ramki); id. at 24:3–23 (Blanchard). 31 Id. at 64:16–65:2, 66:1–10 (Blanchard). 32 Id. at 289:21–290:18 (Ramki). 33 Id. 5  The Board considered a new credit facility at a meeting on November 19, 2019.34 At the meeting, the Board approved the 2020 budget for OTUS.35 Separately, the Board instructed management to seek a bank-led revolving credit facility.36 Management went to the market with those instructions. Morris White, the CFO of OTUS since 2019, negotiated with lenders.37 During negotiations, OTUS learned that lenders opposed distributions.38 Because negotiations occurred during the onset of the COVID-19 pandemic when the credit market had constricted,39 OTUS had to accept “whatever [the lenders] gave [them] at that point in time.”40 As a result, the terms of the credit facility limited OTUS’s ability to make distributions.41 The Board executed a written consent to approve the final terms of the credit agreement on March 16, 2020.42 White then executed the credit agreement on March 18, 2020.43 Over the next several years, OTUS spent over $250 million making capital expenditures to grow the business.44 One of Odfjell’s most valuable assets was a 34 Trial Tr. at 200:15–201:16 (White); JX-43 at 2, 6–7. 35 JX-43 at 6; Trial Tr. at 201:1–7 (White). 36 JX-43 at 7. 37 Trial Tr. at 153:6–20, 212:2–18 (White); JX-47 at 1. 38 Id. at 291:14–21 (Ramki). 39 Id. at 291:22–292:6 (Ramki); see JX-54. 40 Id. 41 Id. at 13:8–13 (Blanchard); id. at 291:18–21 (Ramki); id. at 1008:7–14 (Iversen). 42 JX-53; see also Trial Tr. at 217:12–219:1 (White); JX-45. 43 JX-54 at 1, 127; see also Trial Tr. at 77:16–78:24 (Blanchard). 44 Trial Tr. at 214:15–20 (White). 6 Houston-based terminal constructed in 1982 under the leadership of Dan Odfjell, the father of the Company’s current chairman.45 OTUS spent $9.9 million in 2020 and 2021 to upgrade the Houston terminal’s hydraulic power unit.46 The Board also approved spending $60.6 million on the expansion of the Houston terminal.47 OTUS’s capital allocation paid off—its investments nearly doubled EBITDA.48 D. Odfjell Launches Project Clemens. As the Company’s finances improved, Odfjell contemplated buying out Northleaf’s interest. Adrian Lenning, Odfjell SE’s Managing Director for Terminals,49 approached Ramki about acquiring Northleaf’s OTUS stake in June 2023.50 The approach was informal—Lenning had not broached the topic with his superiors.51 According to Lenning, Ramki gave a lukewarm response as Northleaf was not contemplating an exit, but they always considered inbound interest.52 Lenning, however, gleaned from the conversation that Odfjell could submit an offer to Northleaf without offending them.53 45 Id. at 670:12–19, 673:7–15, 674:5–18 (Lenning) (testifying that the terminal is Odfjell SE’s “single most valuable and unique asset” because of its technological capabilities and location at the beginning of one of the world’s largest chemical shipping channels). 46 JX-1071 at 7–9; Trial Tr. at 220:19–221:3 (White); id. at 79:24–80:22 (Blanchard). 47 JX-1042 at 34–35; Trial Tr. at 82:24–84:12 (Blanchard). 48 Trial Tr. at 465:14–22 (Ramki). 49 PTO ¶ 36. 50 Trial Tr. at 690:7–19 (Lenning). 51 Id. at 690:22–691:6 (Lenning). 52 Id. at 691:7–14 (Lenning). 53 Id. 7  Based on the preliminary conversation, Lenning initiated “Project Clemens” to acquire Northleaf’s OTUS stake.54 On August 14, 2023, Lenning sent a Project Clemens presentation to Harald Fotland, the CEO of Odfjell SE, and Terje Iversen, the CFO of Odfjell SE.55 The presentation explained Odfjell’s rationale behind an acquisition.56 Odfjell believed that Northleaf was likely to seek to exit its investment in OTUS as early as 2024.57 Other pressures made Odfjell believe that Northleaf would consider an acquisition, including the current challenging fundraising environment.58 By acquiring Northleaf’s stake, Odfjell avoided the possibility of Northleaf selling to an incompatible business partner and also created additional merger opportunities. 59 Odfjell further saw “a strong rationale . . . to pre-empt a competitive process”—an auction of Northleaf’s stake.60 After the presentation, Fotland and Iversen blessed Lenning’s further outreach to Ramki.61 54 Id. at 691:17–22, 703:2–8 (Lenning).Lenning named the project after legendary baseball player, Roger Clemens, who played for the Toronto Blue Jays (where Northleaf is headquartered) and found further success with the Houston Astros (where OTUS’s Houston terminal is located). Lenning Dep. Tr. at 19:7–19. 55 Id. at 691:17–22 (Lenning); JX-128; PTO ¶¶ 34–35. 56 See JX-128. 57 Id. at 3. 58 Id. at 3, 5. 59 Id. at 6. 60 Id. at 3 (emphasis in original). 61 Trial Tr. at 691:19–692:9 (Lenning). 8  In August 2023, Lenning again broached a potential buyout with Ramki.62 Ramki discussed the issue with his superior, Jamie Storrow, Northleaf’s Co-Head of Infrastructure.63 Ramki emailed Lenning that he “started an internal discussion with Jamie and as you would expect, the notion of selling without running a competitive process is a steep uphill battle.”64 In September 2023, Lenning presented Project Clemens to the full Odfjell SE board.65 The presentation shared the same strategic rationales as those shared with Fotland and Iversen.66 Lenning also recommended submitting an offer in 2023 because a “competitive process will likely push the price to levels where Odfjell cannot compete.”67 The Odfjell SE board approved Project Clemens, allowing Odfjell to approach Northleaf with a non-binding offer.68 On October 27, 2023, Odfjell offered Northleaf $204 million for their OTUS stake.69 Northleaf rejected the offer.70 Ramki told Lenning that the offer “was woefully low.”71 Lenning’s notes on the exchange state: “[Northleaf] feel[s] our price 62 Id. at 692:6–11 (Lenning). 63 See id. at 693:2–4 (Lenning); PTO ¶ 40. 64 JX-134 at 2. 65 JX-749 at 1, 103; Trial Tr. at 705:6–20 (Lenning). 66 See JX-749 at 103, 105. 67 Id. at 107. 68 Trial Tr. at 711:11–19 (Lenning). 69 Id. at 302:23–303:15 (Ramki); id. at 711:11–19 (Lenning); JX-172 at 2. 70 JX-173; Trial Tr. at 1029:19–1030:1 (Storrow). 71 Trial Tr. at 305:17–23 (Ramki). 9 (USD 417 mln for 100%) undervalues (i) the growth potential of the business, (ii) the value from relevering and (iii) the control premium[.]”72 E. The Board Approves The 2024 Budget. Meanwhile, business continued. Consistent with the LLC Agreement, the OTUS Board approves a budget annually.73 The budget “guides how [OTUS] allocate[s] capital to meet the [C]ompany’s growth initiatives, as well as [] finance operations.”74 CFO White and his team take months to prepare the annual budget for Board approval.75 Producing a budget follows a set procedure each year.76 Beginning in May, White and his team start preparing a budget.77 Next, the Board’s budget subcommittee vets their work.78 In 2023, both Ramki and Lenning sat on the OTUS budget subcommittee.79 Last, the budget goes to the full Board for approval.80 Management presented the 2024 budget to the Board at a November 2023 Board meeting.81 For the meeting, management prepared materials and an agenda 72 JX-195 at 6. 73 Trial Tr. at 338:5–6 (Ramki); LLC Agreement § 7.2. 74 Trial Tr. at 155:8–18 (White). 75 Id. 76 See id. at 155:21–156:23 (White). 77 Id. at 155:21–24 (White). 78 Id. at 156:1–6 (White). 79 Id. at 156:9–12 (White). 80 Trial Tr. at 338:5–6 (Ramki); LLC Agreement § 7.2. 81 JX-189 at 3, 22–30. 10 to guide the Board’s discussion.82 The agenda listed the “2024 budget” as an “approval” item, indicating that management would seek approval of the 2024 budget at the meeting.83 The Board minutes show that the Board “[a]pproved downside case one,” a scenario that used lowered EBITDA.84 Because the budget prepared for the meeting did not reflect that set of assumptions, the Board directed management to prepare an updated budget presentation reflecting “downside case one” before it formally approved the budget.85 The Board materials and minutes also cover a proposed refinancing.86 The minutes indicate that before the meeting, the Board “requested [an] update on the refinanc[ing] process after vetting with the Board working group.”87 The agenda listed the refinancing as an informational update.88 In management’s presentation, a slide titled “Debt Refinancing / Credit Facility Covenant Redesign” gives a detailed update on management’s progress towards a refinancing.89 The situational overview section states that management “conducted a debt product overview for the Board working group” and “the working 82 See id. 83 Id. at 8; Trial Tr. at 716:5–717:6 (Lenning); id. at 223:8–19 (White). 84 JX-189 at 3. 85 Trial Tr. at 721:14–19 (Lenning). 86 See JX-189 at 1, 3, 8, 39, 43. 87 Id. at 1. 88 Id. at 8. 89 Id. at 39. 11 group agreed to a limited market test for a potential [term loan] solution.”90 The slide shows four objectives: (1) “[c]onsummation of refinancing by end of Q1 2024”; (2) secure an approximately “$350 [million] [f]ive [year] tranche credit facility”; (3) “[l]everaged distribution upon transaction close”; and, (4) “[c]ovenant redesign.”91 At trial, witnesses disagreed on whether the Board discussed a $350 million refinancing and leveraged distributions during the meeting. Blanchard testified that the Board reviewed the refinancing slide.92 Ramki agreed.93 But Lenning testified that the Board did not.94 The preponderance of the evidence, however, indicates that the Board in fact discussed a $350 million refinancing during the meeting. Beyond Blanchard’s and Ramki’s testimony, the Board meeting minutes reflect that Iversen sought additional information about OTUS’s “liquidity forecast based on the final budget, including the impact of refinancing.”95 In his testimony, Lenning conceded that management could not provide a “liquidity forecast” without knowing the refinancing numbers.96 Moreover, the refinancing slide showing the $350 million figure is the only one in the 90 Id. 91 Id. (emphasis added). 92 Trial Tr. at 17:2–7, 19:10–22:9 (Blanchard). 93 Id. at 316:22–24 (Ramki). 94 Id. at 848:2–10 (Lenning). 95 JX-189 at 3. 96 Trial Tr. at 846:9–847:16 (Lenning). 12 presentation’s refinancing update section.97 It is unlikely that the Board skipped an entire section. The meeting was not rushed. It lasted two days. Given the testimony and circumstances, the court finds that the Board considered the $350 million refinancing at the meeting. But there is no evidence that the Board approved it during the meeting. At most, the Board gave management approval to seek terms for a financing. At Lenning’s request, White circulated a written consent for Board approval of the 2024 budget and a separate deck entitled “2024 Budget Presentation” on December 12, 2023.98 The Board approved the written consent (the “Written Consent”). The Written Consent gave management the green light to secure prospective terms for a $350 million refinancing.99 Five of the six Board members executed the Written Consent by DocuSign.100 The sixth manager—Odfjell’s Arild Viste—had difficulty with DocuSign.101 Viste signed the consent at the next Board meeting in February 2024.102 Later, Odfjell questioned whether the Board fully executed the Written Consent.103 When shown 97 JX-189 at 38–40. 98 JX-208; JX-213. 99 Trial Tr. at 19:10–17, 29:18–30:3, 52:11–18 (Blanchard); id. at 172:5–13 (White). 100 JX-266; Trial Tr. at 173:16–174:18 (White). 101 Trial Tr. at 174:2–10 (White); JX-264. 102 Trial Tr. at 174:10–15 (White); JX-266. 103 JX-453 at 2. 13 the documentation, however, Lenning agreed that the Board executed the 2024 Budget.104 F. Management Pursues A Refinancing. Although the December 2023 written consent authorized management to secure terms of a $350 million refinancing, both management and the Board understood that OTUS could not enter into a credit agreement without the Board’s final approval.105 Still, management believed a refinancing would happen in 2024.106 As White explained, management believed that Northleaf and Odfjell agreed to seek a $350 million refinancing and a subsequent distribution in 2024.107 And Blanchard’s bonus depended on securing the refinancing—the Board made the refinancing one of his top objectives and part of his performance “scorecard.”108 After the November Board meeting, therefore, OTUS management began contacting “banks about that $350 million structure[.]”109 But the refinancing would never happen. 104 Lenning Dep. Tr. at 92:9–15. 105 Trial Tr. at 289:24–290:23 (Ramki); id. at 210:7–11 (White); id. at 34:1–24 (Blanchard). 106 Id. at 168:18–23 (White); id. at 34:17–24 (Blanchard). 107 Id. at 168:6–23 (White). 108 Id. at 35:6–13, 36:5–9, 37:7–18 (Blanchard); JX-625. 109 Trial Tr. at 29:18–24 (Blanchard). 14  G. Tax Issues Come To Light. A few months after Odfjell initiated buyout discussions with Northleaf, Odfjell became aware of tax issues with Odfjell SE’s distributions to its wholly owned subsidiary, OTBV.110 Tax complications were not new to Odfjell.111 As early as 2021, Ernst & Young evaluated the “tax implications of making distributions” from OTUS to the Members.112 That year, Odfjell SE discovered two tax issues related to the structure of OTBV and distributions.113 First, Odfjell learned that distributions to OTBV, the prior Odfjell SE member of OTUS, would incur a 30% withholding tax, not 5%.114 Second, a sale of OTBV’s 51% membership interest in OTUS would likely trigger a 21% capital gains tax under the Foreign Investment in Real Property Tax Act (“FIRPTA”), resulting in $40 to 50 million in tax liability.115 In November 2022, Odfjell SE developed a restructuring plan to minimize taxes incurred in connection with distributions or a sale of OTUS.116 110 Id. at 727:15–728:1, 882:9–11 (Lenning); JX-234. 111 See JX-77 at 6. 112 Id. 113 JX-670 at 4. 114 JX-1004 at 1. 115 JX-670 at 4–5; JX-1004 at 1. 116 JX-99 at 2; JX-670 at 6. The plan involved “establishing a Norwegian terminal holding company and transferring that holding company to OTBV, which would then contribute its OTUS interest to the Norwegian holding company, which would then contribute the OTUS interest to another newly formed Norwegian subsidiary[.]” JX- 670 at 5. The restructuring would reduce FIRPTA tax liability triggered by a sale and subject distributions to a 15% withholding rate, not 30%. Id. 15  The restructuring created a new problem.117 Sometime in late 2023, Odfjell learned that any OTUS distribution during the restructuring would destroy the restructuring’s cleansing of FIRPTA tax liability.118 The legal concerns posed real problems for Odfjell, but they also created an opportunity, as Lenning recognized. Lenning offered “an extra ginger cookie” to anyone who could identify how Odfjell could use the issue to their advantage.119 One employee suggested using the issue to create timing pressure in negotiations with Northleaf.120 The employee suggested giving Northleaf an “ultimatum” to “stir things up and potentially accelerate their decision making—hopefully in [Odfjell’s] favor.”121 In January 2024, Lenning contacted Ramki to explain Odfjell’s concerns with distributions. He followed up with an email on January 21, 2024.122 In the email, Lenning explained the current situation, stating that “we understand that distributions to OTBV would be taxed at a highly punitive rate of 30%. That would obviously be a show-stopper with respect to receiving dividends from OTUS.”123 The restructuring would halve the withholding tax rate, placing it “at a level where 117 JX-670 at 6. 118 Id. at 5–6; Dkt. 253, Ex. 1 at OTBV_00045471–73 (“We learnt early that it’s important that OTUS does not distribute any dividends in the three years preceding the restructuring as that would trigger US inversion rules. We recently learned that this also applies to a dividend distribution evenly to both owners based on ownership percentage (as no such dividend has been regularly paid).”). 119 Dkt. 253, Ex. 1 at OTBV_00045471. 120 Id. at OTBV_00045473. 121 Id. 122 JX-232. 123 Id. at 1. 16 [Odfjell is] able to be collaborative when it comes to distributions.” 124 Plus, it would eliminate the $40 to 50 million capital gains overhang provided Odfjell did not sell its OTUS stake within 12 months of the restructuring.125 Moreover, a 2024 distribution could trigger U.S. inversion tax rules that disregard the restructuring (the “Inversion Tax Issue”).126 To avoid that, Odfjell SE would have to wait 36 months after a distribution before executing a restructuring.127 And a 12-month standstill period would apply after that.128 A distribution would thus prompt events that would “rule Odfjell out as a potential acquirer of Northleaf’s stake in OTUS during this period, as it introduces a USD 40-45 [million] tax risk.”129 Lenning concluded that “[c]andidly that is not a position which Odfjell would like to put itself in” and that the tax issue is “something that we need to resolve before we can approve a distribution by OTUS.”130 Lenning’s tax advice was not certain. The analysis hinged on whether U.S. tax authorities would view the restructuring as “related to” Project Clemens or a distribution.131 Odfjell’s tax advisor recommended waiting on Project Clemens and a 124 Id. 125 Id. at 1–2. 126 Id. at 2. 127 Id. 128 Id. 129 Id. 130 Id. 131 Dkt. 253, Ex. 6 at OTBV_00045333. 17 distribution so the U.S. viewed the transactions as unrelated.132 The restructuring would reduce Odfjell’s tax overhang provided that Odfjell did not condition either transaction on the restructuring.133 Northleaf engaged its own tax advisor, Leo Burwick, to consider the Inversion Tax Issue.134 Through February and March 2024, the firm met with Odfjell and their tax advisor, Fried Frank.135 The firms disagreed on the gravity of the Inversion Tax Issue.136 Based on advice from Leo Burwick, Northleaf came to believe that the Inversion Tax Issue was “either curable or fictional.”137 H. Odfjell Applies “Gentle Force.” Meanwhile, Odfjell continued to pursue Northleaf’s stake in OTUS.138 Lenning revisited Odfjell’s initial $204 million offer with Ramki in November and December of 2023.139 Northleaf maintained that the $204 million offer was “far too low.”140 In 132 Id. 133 Id. (“For example, the decision to pay the dividend should be made after the drop down, and it should be demonstrated that the dividend was not contingent on the drop down occurring, and the drop down was not contingent on the subsequent dividend being paid. Likewise, negotiations relating to Clemens should begin after the drop down, and it should be demonstrated that Clemens was not contingent on the drop down occurring, and the drop down was not contingent on the subsequent Clemens transaction.”). 134 Trial Tr. at 1028:20–22 (Storrow); JX-757. 135 Trial Tr. at 345:4–7 (Ramki). 136 Id. at 344:10–16 (Ramki). 137 Id. 138 JX-195 at 3; JX-203 at 1. 139 Id. 140 JX-754 at 2. 18 a January 2024 email to Fotland, Lenning stated that Northleaf compared the offer to a refinancing and dividend in 2024 followed by a sale in late 2024 or early 2025.141 Lenning also stated that the “LLC Agreement provides Odfjell with substantial influence over a potential [Northleaf] sale process” due to Odfjell’s right of first refusal, tag-along rights, and disqualified buyers clause.142 In 2024, Odfjell gently dialed up the pressure. Lenning shared a Project Clemens presentation—dated February 7, 2024 and only a few weeks after Lenning’s email to Ramki—with Fotland and Odfjell SE’s board.143 The presentation focused on Project Clemens’ positioning in connection with a restructuring and distributions.144 The presentation first acknowledged the planned refinancing, stating that “Odfjell and Northleaf were jointly pursuing a refinancing of OTUS to allow for dividend distributions in 1 H24.”145 It further stated that “certain tax considerations relating to the envisaged restructuring . . . may cause Odfjell to change its stance on near-term distributions from OTUS.”146 From there, a decision tree explains that Odfjell’s “stance on distributions boils down to what we intend for Clemens and for the terminal portfolio in the near and medium term[.]”147 If Odfjell pursues an 141 Id. at 2–3. 142 Id. at 3. 143 Trial Tr. at 898:19–899:8 (Lenning). 144 See JX-755. 145 Id. at 2. 146 Id. at 3. 147 Id. at 4. 19 acquisition, the presentation recommends executing a transaction before a distribution and using “dividends/inversion as [a] ‘bargaining chip.’”148 The next slide reinforced the recommendation.149 Executing Clemens meant “hold[ing] back on distributions” and using “inversion issue and dividends as [a] ‘bargaining chip.’”150 The presentation recognized that Odfjell’s “right to ‘block’ dividends in OTUS may be challenged” and “Northleaf could ‘strong arm’ a distribution, which would likely put Odfjell at a disadvantaged position with respect to potential tax leakage, as well as capital gain tax exposure (FIRPTA) and/or potentially acquiring OTUS in the near/medium term[.]”151 Ultimately, Lenning believed that “using ‘gentle force’” could lead to a transaction in the $215 and $225 million range.152 Timing was critical. Odfjell knew their “best chance [was] to provoke/simulate a transaction now rather than to wait for Northleaf to run a sale process.”153 Preempting an auction allowed Odfjell to bring Northleaf down to a price range where it could compete.154 148 Id. Odfjell uses the terms “dividends” and “distributions” interchangeably in its communications. 149 See id. at 5. 150 Id. 151 Id. at 6. 152 Id. at 7. 153 Id. 154 See id. 20  The presentation did not mention excessive leverage as a factor to consider for OTUS distributions.155 But an email exchange between Lenning and Laurence Odfjell did.156 Responding to Laurence Odfjell’s inquiry on a high-leverage refinancing, Lenning stated, “we from day 1 have pushed back on both leverage and structure” and “less dividends should obviously also make Clemens a more attractive alternative for Northleaf.”157 Then, in a prescient analysis, Lenning explained why he believed failing to execute on Project Clemens and holding back on distributions would result in a “lose- lose scenario”: If we deprive [Northleaf] of a meaningful dividend, however, we are really throwing down the gauntlet; (i) we have shown that we are not a contender that will meet their price expectation on Clemens, (ii) we have signaled that we would use our governance rights to ensure we end up with a partner we like, (iii) we hurt their investment performance . . . by strangling dividends and (iv) we make OTUS less attractive for prospective buyers as it comes with a JV partner who obstructs distributions.158 Lenning expanded on this email exchange at trial.159 On leverage, Lenning explained that Odfjell and its parent company prefer low leverage because of the cyclicality of their business.160 OTUS maintains leverage at approximately three 155 See id. at 1–11. 156 JX-248. 157 Id. at 1. 158 Id.; Trial Tr. at 732:7–733:10 (Lenning). 159 See Trial Tr. at 734:16–742:10 (Lenning). 160 Id. at 737:1–15 (Lenning). 21 times EBITDA, in line with industrially owned terminal companies.161 Lenning acknowledged that Odfjell wanted a dividend but they did not want OTUS leverage to exceed five times.162 The Odfjell SE board discussed the presentation on February 8, 2024.163 According to the board minutes, “Lenning commented that if we intend to proceed with Project Clemens, then it will be unfortunate to proceed with dividends from OTUS at this point.”164 Iversen stated, Odfjell has to “put the hand-break on the dividend in order to first solve the items related to Project Clemens” and Odfjell wants distributions to show its shareholders the holding company can generate cash.165 A March 21, 2024 presentation explained Odfjell’s financing strategy to the Odfjell SE board.166 DNB, a Norwegian bank, could provide a $200 million bridge loan.167 Then Odfjell SE could execute a “full refinancing of OTUS at 5x EBITDA.”168 The presentation also updated the Odfjell SE board on Project Clemens.169 It stated that if Odfjell pursued Project Clemens, “the recommended approach is to hold 161 Id. at 737:16–738:7 (Lenning). 162 Id. at 737:3–8 (Lenning). 163 JX-252. 164 Id. at 5. 165 Id. at 6. 166 JX-709 at 1, 9. 167 Id. at 9. 168 Id. 169 Id. at 8. 22 back on distributions, actively pursue an agreement with Northleaf and use the inversion issue and dividends as a bargaining chip.”170 Lenning met Storrow in March to discuss the buyout.171 At the meeting, Lenning tried spinning the Inversion Tax Issue as a positive pressure point for Northleaf.172 At trial, he explained: “I believed my stakeholders and my colleagues understood that [the Inversion Tax Issue] was something we would have to solve. And it was our problem, and that the acquisition was an elegant way of solving that problem.”173 At this stage, Ramki wanted to involve senior leadership of Odfjell and Northleaf.174 Lenning and Ramki arranged a meeting between Fotland and Storrow for March 8, 2024.175 Lenning prepared call notes for Fotland.176 The notes covered three areas: the Inversion Tax Issue, distributions, and an acquisition.177 Regarding distributions, the notes charted Odfjell’s evolving stance.178 Lenning stated that Odfjell’s appetite for distributions changed because their shareholders already received dividends and Odfjell SE wanted to invest more in its 170 Id. 171 Trial Tr. at 749:10–750:12 (Lenning). 172 See id. (explaining that the tax issue could be a “blessing in disguise” because it could convince Odfjell to pay a higher price). 173 Id. at 750:5–9 (Lenning). 174 Id. at 927:21–928:5 (Lenning). 175 Id.; see JX-756 at 2. 176 JX-756 at 2; JX-757. 177 JX-757. 178 Id. at 2–3. 23 terminals platform.179 And Odfjell uncovered the new Inversion Tax Issue associated with the restructuring.180 As a result, their desire for distributions “is really only about wanting to accommodate Northleaf” and “[w]ithout a way around the inversion issue, [any distribution] is really a ‘no-go’ for [Odfjell][.]”181 On April 16, 2024, Ramki emailed Lenning with guidance on the valuation of OTUS.182 Northleaf expected a buyer to value OTUS at 13 times forward EBITDA or more.183 Lenning took this guidance back to the Odfjell SE board.184 The executive summary presented at the May 7, 2024 meeting stated that “Northleaf has expressed willingness to sell their share in [OTUS]. This is mainly due to our tax situation which prevents dividends.”185 Odfjell SE management analyzed the different responses Northleaf could take given “[t]ax issues inhibiting near-term distributions.”186 Ultimately, Odfjell SE management recommended that Odfjell give 179 Id. at 3. 180 Id. 181 Id. at 3 (emphasis in original). 182 JX-305 at 2. 183 Id. 184 JX-711 at 70. 185 Id. at 3. 186 Id. at 74. 24 Northleaf the option between a standstill agreement and another buyout offer, this time for $216 million.187 The Odfjell SE board approved this approach.188 On May 14, Lenning gave Northleaf the two options.189 Northleaf rejected Odfjell’s $216 million offer because it believed a market-driven process would yield a higher offer.190 But Northleaf wanted to explore the standstill agreement further.191 On August 14, 2024, Lenning sent a draft standstill agreement to Ramki.192 The agreement aimed to reduce OTUS’s leverage and stop distributions for 24 months.193 The Members never agreed on a standstill agreement.194 On September 8, Ramki followed up to provide Northleaf’s perspective on leverage.195 Northleaf wanted the standstill to target 5.6x debt-to-EBITDA and a minimum of 4.75x.196 Lenning pushed back.197 On September 13, he replied, “[a] total leverage approaching 5 times EBITDA is already well above the levels Odfjell normally would be comfortable with.”198 Their other terminal businesses have 187 Id. at 72, 76. 188 JX-305; JX-710 at 8–9; Trial Tr. at 746:24–747:17 (Lenning). 189 JX-305. 190 JX-312. 191 Id.; Trial Tr. at 374:17–375:1 (Ramki). 192 JX-323 at 1. 193 Trial Tr. at 381:19–382:4 (Ramki). 194 JX-342 at 1; JX-714 at 1. 195 JX-342 at 2. 196 Id. 197 Id. at 1. 198 Id.